Advice on savings...

My wife and I have been making great strides in our finances after years of overcoming debt. We are now in a position that I didn't think we would be in for some time -- debt free.

We shoud have a good amount left over at the end of each month for savings. We already have an emergency fund, and monthly budget towards different categories like a 6-month car insurance fund, vacation fund, new car fund etc.

With the extra money leftover (the point of the topic) I have an option to put up to 20% of my paycheck towards company stock and get a 5% discount. However, I already have quite a bit of stock built up with my employer (around a third of my stock holdings is company stock). Should I add to the amount committed to this program, or should I diversify by buying other stocks, etfs or mutual funds outside of the employer program? A 5% discount from a great employer is great, but I'm concerned about having too concentrated of a position. Any thought would be appreciated.

Re: Advice on savings...

Op, I'm not heavy in knowledge of the stocks game, but I like the thought of diversifying, if possible. It just seems like for your scenario, it gives you more flexibility and options. On another note, great job getting out of debt and saving money the way you are!

Re: Advice on savings...

Congrats on being debt free and in a position to save. Leftover $$ have a tendancy to slip away. I respectfully suggest that savings be made a budget item -- the first one if possible. Pay yourself first!

Investing is fun. There is a lot of reading material to help you along the way.

Re: Advice on savings...

My wife and I have been making great strides in our finances after years of overcoming debt. We are now in a position that I didn't think we would be in for some time -- debt free.

We shoud have a good amount left over at the end of each month for savings. We already have an emergency fund, and monthly budget towards different categories like a 6-month car insurance fund, vacation fund, new car fund etc.

With the extra money leftover (the point of the topic) I have an option to put up to 20% of my paycheck towards company stock and get a 5% discount. However, I already have quite a bit of stock built up with my employer (around a third of my stock holdings is company stock). Should I add to the amount committed to this program, or should I diversify by buying other stocks, etfs or mutual funds outside of the employer program? A 5% discount from a great employer is great, but I'm concerned about having too concentrated of a position. Any thought would be appreciated.

Can't you sell company stock you have purchased? If yes consider selling existing stock and purchasing other equities, mutual funds and bonds. Then you can continue taking advantage of the 5% discount. As time goes on rinse and repeat. [Is therere some minimum time duration for selling shares you purchase at a discount?]

Re: Advice on savings...

My wife and I have been making great strides in our finances after years of overcoming debt. We are now in a position that I didn't think we would be in for some time -- debt free.

We shoud have a good amount left over at the end of each month for savings. We already have an emergency fund, and monthly budget towards different categories like a 6-month car insurance fund, vacation fund, new car fund etc.

With the extra money leftover (the point of the topic) I have an option to put up to 20% of my paycheck towards company stock and get a 5% discount. However, I already have quite a bit of stock built up with my employer (around a third of my stock holdings is company stock). Should I add to the amount committed to this program, or should I diversify by buying other stocks, etfs or mutual funds outside of the employer program? A 5% discount from a great employer is great, but I'm concerned about having too concentrated of a position. Any thought would be appreciated.

Can't you sell company stock you have purchased? If yes consider selling existing stock and purchasing other equities, mutual funds and bonds. Then you can continue taking advantage of the 5% discount. As time goes on rinse and repeat. [Is therere some minimum time duration for selling shares you purchase at a discount?]

Most ESPP plans allow you to sell the stock as soon as it vests. I imagine it's no different for the OP's plan. Some brokerages even allow you to automate this so they sell immediately upon vesting.

The one thing to keep in mind is if you sell within 12 months of vesting, you get to pay income tax on the gains from your purchase price instead of capital gains tax. At a 5% discount, that won't amount to much, though if your ESPP is also doing a 6/12-month lookback for pricing you may be on the hook for those gains too.

Re: Advice on savings...

I don't know if it's your bag or not but I took out a loan, and the bank who is lending me the money is using the loan principal to buy a CD. As I pay off the loan, the CD grows until it's mature. Then according to a promissory note given to me by the bank, once the loan is paid off the bank will keep the interest, and I get to the CD and can cash it out. The idea is to basically take a loan from yourself that shows you can make payments which helps your credit and it forces you to make monthly payments and Save. Your results May Vary but it works for me.

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